A deal to suit both sides?

One doesn't often hear the names Rupert Murdoch and Enterprise Inns mentioned in the same breath.

Both represent among the largest of their kind and both, according to the award-winning Thornbridge Brewery, are changing the way they operate in order to respond to the rapidly changing demands of the markets in which they function.

In Murdoch's case it's about moving quickly to outwit his media rivals. With Enterprise it's a matter of operating innovatively in altered market circumstances.

Certainly things for the UK's second largest pubco are different now, compared with 2008 when Jim Harrison, Thornbridge's founder, and his fellow director Simon Webster, approached Enterprise to see if it would bite on an idea the pair had.

Selling its own beer

Based near the Derbyshire town of Bakewell, the award-winning brewer - which counts the increasingly popular Jaipur cask ale as one of its best sellers - already leased two pubs from Enterprise, says Harrison. But it wanted to be able to sell its own beers across the board, rather than the limited range its existing lease deals allowed.

"At the Cricket Inn at Totley, near Sheffield, we sold four of our beers, but at the Inn at Troway, also near Sheffield, we could only sell two of our beers and two from Enterprise's list. The reason the Troway was underperforming was because it wasn't a Thornbridge pub. We wanted control," says Harrison.

The pair identified the Highcliffe pub in Ecclesall, a leafy part of Sheffield, as somewhere they could do business. It was where Harrison drank as a younger man, but it had fallen on distinctly hard times, with a string of successive - but not successful - lessees.

"I knew the area and what the pub stood for," he says, "but it wasn't a place the local community wanted to go. It was intimidating."

So a call was placed with Enterprise to see if some arrangement could be reached whereby the brewer could take on the pub, but sell its own cask ales without hindrance. Or tie.

"It took two years to get the message higher and higher up, but the marketplace was changing and they recognised they could do with specialised operators like us," says Harrison.

"We wanted food in the pub but the prime focus was going to be our beer. We wanted to market the place as a Thornbridge Brewery pub. And we needed exclusivity to make it pay."

Two years ago Enterprise "didn't rush at the proposition", he says. However, slowly but surely over time the brewer

was able to make its case. Eventually a deal was done whereby Thornbridge agreed to pay an undisclosed monthly tie release fee on its cask ale, which means it can sell as much of the stuff as it can pour into glasses.

The pub opened on November 4 and sold more than 3,000 pints in its first 48 hours of trading and its performance has remained encouraging. A win/win for everyone then?

"We think we've struck a very reasonable deal," says Harrison. "We're still tied on keg products - where we get a good discount - but we're not tied on wines, spirits, soft drinks or particularly on bottled beers, which is important because as a brewer we want to highlight world beers. Frankly, the selection offered by the big pubcos is pathetic."

Accommodating pubco

Harrison said Enterprise was accommodating when it came to Thornbridge's input into the look and feel of the pub. "They gave us access to their architect and we agreed on the sort of interior look we were after. Part of the deal was also that they stumped up for the fixtures and fittings, which they've annualised on our rent over the first three years," he says.

The pubco ended up paying around £150,000 to refurbish the Highcliffe, renamed the Greystones, with Thornbridge putting in around £20,000. Enterprise divisional director Duncan Marsden said the level of money the company pumped into the deal "shows our commitment to this type of model".

Marsden said the co-operation had led to a "quality finished pub, delivered on time and on budget - a tremendous success for all involved".

Emboldened, Harrison and his colleagues are turning their attention to the terms of the other leases they have with Enterprise, which they hope they can change to a Greystones-type model.

Thornbridge isn't stopping there either. "There could be other Enterprise lessees who are struggling and might want a partner like us," says Harrison. "We can pay their tie release fee in return for them exclusively stocking our cask ale. We're confident people will go to a pub to buy and drink our beer."

While it's clearly early days Harrison believes the deal he and his team has struck with Enterprise stacks up for both sides. He gets his beers in a pub he can manage, hands-on, while Enterprise sees a previously tired and rundown asset given a new lease of life. Literally.

Harrison sums it up thus: "I think they've recognised that a massive number of their pubs are going nowhere fast and they can benefit from small, decent operators. And small brewers are often the right people to deal with."